Why More California Homeowners Are Losing Their Insurance

Published on


July 24, 2019

This week, my colleagues Thomas Fuller and Ivan Penn wrote about how Californians — especially the many living in fire-prone rural areas — are bracing for what is likely to be another intense and costly wildfire season. In fact, we’re already paying.

I asked Ivan to tell us a little more about skyrocketing insurance costs. Here’s what he found:

Almost two years ago, the California Department of Insurance got a letter complaining about insurance companies’ treatment of consumers as it relates to wildfires.

The letter, penned by Jamie Court, president of the nonprofit advocacy organization Consumer Watchdog, seemed prescient, given the devastating wildfire last fall that killed 85 people and destroyed the town of Paradise. Mr. Court called on the department to help protect homeowners facing inadequate coverage and high costs after the previous years’ fires.

“California residents who have seen homes turned to ash are concerned that they may now get burned by their own insurance company,” Mr. Court wrote in the October 2017 letter.

[Read Thomas and Ivan’s full story here.]

It turns out that at least some customers living in wildfire-prone areas still can’t get the coverage they need at reasonable prices.

On Monday, my colleague Thomas Fuller and I reported that across the state people are scrambling to prepare for the peak of wildfire season, from utilities inspecting and trimming trees throughout their service areas to consumers buying generators and home battery systems. Others have been left to fret over whatever might befall them because of troubles with their insurance company.

The state insurance department does not keep track of the number of homeowners who have lost their insurance because of wildfire risks, but the number of complaints it received on the issue has increased steadily over the past eight years, to 276 last year from 41 in 2010.

David McGiffert, of Topanga Canyon in Los Angeles, received a letter from his insurance company, Allstate, just weeks ago, stating that his policy would end in September after more than 20 years as a customer. Other companies want five times the $1,800 a year he pays for his current policy.

“I don’t have any idea what we’re going to do,” Mr. McGiffert said. “Our house is our equity. It’s what we have to leave our children.”

[Here’s what to know about Pacific Gas & Electric’s role in the deadly Camp Fire.]

In his letter to the insurance department, Mr. Court emphasized the need to ensure that homeowners have adequate replacement coverage, but he also called for a review to resolve a “decades-old problem” still facing consumers like Mr. McGiffert, a 77-year-old retiree from the film industry.

“Fortunately, existing law provides the options to allow the insurance commissioner to fashion a complete short-term and long-term remedy,” Mr. Court stated in the letter.

Are you dealing with costs related to wildfire risk, like paying more for insurance? Are you buying equipment? Tell us about it at [email protected]

Consumer Watchdog
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